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Movie Subscription Services and Box Office Booms and Busts

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Estimated Reading Time: 5 minutes 02 seconds


There has been a lot of consternation out here in La La Land about the state of the movie industry in 2019. I thought I would take this opportunity to address the situation in an attempt to either allay concerns or ring the alarm bell.

The biggest reason that the money-hungry corporate overlords of Hollywood are so concerned is that the box office is down 10% from last year. There have been a lot of think pieces that speculate as to why the industry is supposedly in a gully. The most common refrain in these articles from the entertainment media is that the box office dip is due to plague of low quality, unoriginal movies and “franchise fatigue”.

These theories, on their surface, appear to be somewhat accurate, as the vast majority of movies are pretty awful and you seemingly can’t walk ten feet in Hollywood without tripping over yet another franchise film or reboot. While those two things are true, they don’t necessarily explain why the box office is down 10% this year in particular as last year Hollywood churned out a plethora of terrible movies and a cornucopia of franchise films.

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Last year and this year at the movie theatre are strikingly similar in a myriad of ways…2018 had some massive blockbusters in Black Panther and Avengers: Infinity War, while 2019 boasts box office smashes Captain Marvel and Avengers: Endgame. In addition, 2018 had an animated hit with Incredibles 2 and 2019 has Toy Story 4, 2018 had big box office results from secondary superhero movies, like Aquaman and Deadpool 2, while 2019 has Shazam and the soon to be released Spider Man: Far From Home. Even the sort of middle brow dramas are similar, with both years showcasing bio-pics of 1970’s rock icons, Queen in Bohemian Rhapsody (2018) and Elton John in Rocketman (2019), as are the horror/thriller films, where 2018 had A Quiet Place and 2019 has Us.

The sad reality is that, just from a quality perspective, movies from last year are just as bad as last year. The year before last, 2017, had a cavalcade of great movies, like Dunkirk, Phantom Thread and even quality big budget films like War for the Planet of the Apes. But last year and this year have both been pretty terrible for cinema. The lack of quality is certainly a big reason why the movie industry is in a creative “gully” so to speak, but it doesn’t explain why there is such a precipitous drop off in box office from last year to this.

“Franchise fatigue” is certainly something that exists…hell, I suffer from it…but that doesn’t mean it adequately explains the drop off in box office. If you look at the box office numbers, it would seem to indicate that the opposite is true. Both Captain Marvel and Avengers: Endgame did record breaking business this year and they are franchise films…and Black Panther and Infinity War did great last year as well. In my opinion there are most definitely storm clouds on the horizon for Marvel/Disney, but it ain’t raining yet and the sun shone upon Mickey Mouse and his Marvel compatriots brightly the last two years.

So if the studio executives and the entertainment media are wrong with their theories about the box office decline in 2019…then what is really going on with the movie industry and why? The problem with these Hollywood elites is that they don’t spend time on the ground in the battle for box office dollars. As someone who spends his time either on the ground or under it, I have some insights as to what is causing the trouble with 2019’s box office deflation.

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To start, I contend that while the box office is down this year, it is a result of a few factors, one of the most glaring is that the box office from last year was artificially inflated, thus skewing the intensity of this year’s decline. Yes, there is a decline this year compared to last, but last year was not as financially robust as it appeared to be, in fact it was a bit of a bubble.

I also contend that there is a direct correlation between last year’s box office spike and this year’s box office deflation and the rise (2018) and fall (2019) of movie subscription services like MoviePass and Sinemia. In January of 2018 there were approximately 3 million subscribers to either MoviePass, Sinemia or both. Those subscription services charged a flat fee to customers, in MoviePass’s case $9.99 for unlimited films a month, and in Sinemia’s case $14.99 for 3 films a month, and then would pay full price to theaters/studios when their customers bought tickets. The business model was obviously flawed, but the psychology of it is similar to a gym membership, as these companies were hoping people would sign up but not actually use the service. That approach failed as both services went under in various forms this year because they went deeply into debt paying the movie studios full price for the tickets their members bought.

I had both a MoviePass and Sinemia membership in 2018 and used them constantly. For me, paying $25 total per month for both services meant that if I went to just two films a month I was actually saving money, as tickets in Los Angeles can run as high $16 per movie. Considering I suffer from a medical condition called Cousin Michael-itis where I have abnormally short arms and extraordinarily deep pockets, it should be no surprise that I took advantage of these services.

In 2018 I averaged between four and five movies a month, which was a significant spike in my movie going from the previous year when I had no subscription service memberships. Through these subscription services the price of a movie ticket for me essentially dropped to around $5 per film, which made going to the movies a much more palatable option.

For me, MoviePass and Sinemia allowed me to go see movies I would never have gone to see if I had to pay full price. For example, one of my favorite films from last year was A Quiet Place, which is a horror/thriller movie, a genre I usually entirely ignore. I took a chance on A Quiet Place because I wasn’t paying $16 to see it…so why not? I ended up loving the movie and saw it TWICE using MoviePass and Sinemia, and I got other people to go see it too through passionate word of mouth and my glowing review. Hereditary was another horror film I would normally never see but took a chance on in 2018 because of MoviePass.

It wasn’t just horror movies either, by my count there are in total 26 movies in 2018, from big budget blockbusters to indy art house films, that I went to see in theatres which I never would have seen if it weren’t for MoviePass and Sinemia. Movies such as American Animals, Jurassic World, Ready Player One, Red Sparrow, First Reformed, Hearts Beat Loud, Leave No Trace, Mission Impossible, Eighth Grade, The Wife, We the Animals, A Star is Born and on and on and on.

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Now if all 3 million of these movie service’s former subscribers were like me then that means that 2018’s box office was inflated by at least 3 million full priced tickets sold on 25 films over the course of the year. (Considering the plethora of movies made last year and the subscription service's main customers being similar to me, big movie fans, it seems plausible that those extra tickets purchased could be spread over a large swath of different types of movies.) With the elimination of those extra 3 million tickets paid for by the subscription services, that would mean about a $1.125 billion difference in domestic box office gross from 2018 to 2019, and that doesn’t include peripheral gains from word of mouth marketing by subscription members (nor does it include the concessions bought by these customers at the theater which greatly enhanced theater owner profits).

The domestic box office from last year was $11.6 billion and is projected to drop 10% this year. 10% of 11.6 billion is….1.16 billion. If MoviePass and Sinemia subscribers used the service like I did in 2018, seeing an additional 25 movies that they otherwise would not have seen, that would account for an additional $1.125 billion in gross at the box office (3 million extra tickets bought for 25 films at $15 per ticket). Granted, this theory is based upon my anecdotal use of subscription services and projecting that use onto other members, but since MoviePass and Sinemia have not released the data on their users usage rates, all I can do is speculate. That said, my thesis does seem to line up pretty well with the known box office data.

The elimination of these subscription services and the billion dollars they injected into the movie industry which resulted in them basically subsidizing movie studios, seems to me to be an obvious reason for the drop in box office, yet the studios and the entertainment press, like Variety and The Hollywood Reporter (or the New York Times for that matter), never mention it as a factor, nevermind the main factor...why is that? The reason for Hollywood’s and the media’s ignorance on this issue is that while both studio executives and entertainment media consume a great deal of movies, hence their explanation being “franchise fatigue or low quality…they don’t have to pay to consume them, so ticket prices are overlooked.

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Studio execs and entertainment media either get screeners (free dvd’s from studios) or they go to free screenings. Paying to see a movie is something they rarely if ever do, and considering how much money they make, they do not ever have to consider the cost of tickets into the equation of whether they’ll see a film. If, God forbid, these people ever had to pay for a movie ticket, the difference between $5 and $15 is negligible to them in the big picture, whereas for me, and most “regular” working people, that $10 is a big deal, especially over the course of a month/year if you see multiple films. The Hollywood and media elite are immune to issues like ticket prices, but here on the ground in the battle for customers, it is a major issue. This is why studios and entertainment media are totally ignorant to the impact of MoviePass and SInemia crumbling…they suffer from what I call “Cinema Privilege”. I define Cinema Privilege as being immune to cost when it comes to consuming movies.

When I had MoviePass and Sinemia I had Cinema Privilege too…but now that I don’t have them and I have to pay full price to see a movie it greatly alters my viewing habits and the frequency of my trips to the theatre. I do not make studio executive or even Hollywood Reporter money, I run my own business and margins are thin so I do not have the cash to spend to pay full price to roll the dice on a movie that may or may not be any good (especially if odds are it isn’t very good). I think I am not alone…and thus the current cratering of box office income, and conversely, the inflating of box office last year when there were 3 million extra consumers with Cinema Privilege.

There are three movies that are often brought up when referring to the box office drought of 2019 and they are Long Shot starring Charlize Theron and Seth Rogan, Late Night starring Mindy Kaling and Emma Thompson and Booksmart, a coming of age story directed by actress Olivia Wilde. These films are held up as examples of film’s that dramatically under-performed at the box office regardless of their glowing reviews. I have not seen any of these movies as they don’t greatly interest me, but I guarantee you that I would have seen them all if I had MoviePass and Sinemia. My interest in these films is best described as mild, which is not powerful enough to get me to pay $16 to see them, but it is strong enough to get me to pay $4 or $5 to see them.

There are other reasons for the overall decline in movie going, which include but are not limited to, a dramatic diminishing of the theatre-going experience due to the epidemic of narcissism and rudeness in our culture (in 2019 alone I have had to ask people to put away their cell phones during movies four times…they have all complied…but I shouldn’t have to ask them!), as well as the increase of the home viewing experience through studios like Netflix and Amazon as well as the improvement of tv technology. But both of these reasons are more compelling in explaining the bigger picture trend of movie theatre going decline rather than just the box office drop from last year to this.

In conclusion, I think that the collapse of movie subscription services is the main reason why the box office is down 10% in 2019. I also believe that this story is under-reported because the Hollywood studios and the entertainment media are so detached from “regular” people’s movie going experience and how the exorbitant price of tickets is turning away business. If Hollywood doesn’t wake up, this disconnect between Tinseltown and their regular customers is going to lead to a very nasty reckoning that will leave the movie industry a shadow of its former self, sort of like what happened to the music industry. Hollywood is going to learn that sooner or later, when you take your customers for granted, the bill always comes due…and MoviePass and Sinemia are no longer around to subsidize their shitty product.

©2019